Consumer Bankruptcy and Financial Health

Will Dobbie, Paul Goldsmith-Pinkham and Crystal Yang

No 21032, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper estimates the effect of Chapter 13 bankruptcy protection on post-filing financial outcomes using a new dataset linking bankruptcy filings to credit bureau records. Our empirical strategy uses the leniency of randomly-assigned judges as an instrument for Chapter 13 protection. Over the first five post-filing years, we find that Chapter 13 protection decreases an index measuring adverse financial events such as civil judgments and repossessions by 0.316 standard deviations, increases the probability of being a homeowner by 13.2 percentage points, and increases credit scores by 14.9 points. Chapter 13 protection has little impact on open unsecured debt, but decreases the amount of debt in collections by $1,315.

JEL-codes: D14 K35 (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-ban
Note: LE LS PE
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Citations: View citations in EconPapers (11)

Published as Will Dobbie & Paul Goldsmith-Pinkham & Crystal S. Yang, 2017. "Consumer Bankruptcy and Financial Health," The Review of Economics and Statistics, vol 99(5), pages 853-869.

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